Supply chain protection is imperative

Editor: Anke Schröter

Counterfeited components are a major issue for the electronics industry. Not just limited to certain regions or sectors, the issue is a truly global one.

Supply chains that involve independent distributors are the most 'famous' for being contaminated with counterfeited products. But independent distributors do provide a service in the market space; despite their infamous reputation.

Distributor Velocity Electronics is one of those 'Independents' and has a number of high-reliability customers within Military & Aerospace, Medical and Oil & Gas industries. A safe assumption would be that any of those companies would not do business with independent distributors if their requirements on a secure supply chain would not be met.

Counterfeit products are indeed a huge problem, which – to everyone's dismay – does not seem to get smaller. Reports of counterfeit components have quadrupled since 2009. But the fact remains that any component can be counterfeited. Everything that can be mounted on a board, will come with that risk attached.

“The independent distributor industry has had a bad reputation when it comes to counterfeited products, but we have seen authorised channels shipping counterfeited components too. You can find counterfeit components throughout the entire supply chain”, states Jason Jowers, Director of Quality & Operations for Velocity.

As mentioned above, reports on counterfeit components have skyrocket over the past few years. Whether companies have become more vigilant and rigorous in their reporting, or the problem has indeed taken on rampant qualities remains to be seen. An interesting question, that – despite serving on IDEA's Board of Trustees since 2009 – Jason cannot answer.

He likes to believe that testing capabilities have improved and companies are paying more attention when it comes to counterfeit components as Velocity has done by investing heavily in the capabilities of its three testing facilities, located in Singapore, Austin (Texas) and Amsterdam (The Netherlands). And I have to agree with him; if the amount of counterfeit products is continuously rising – despite all efforts – that would be a rather frustrating thought.

But he also says that a different development can be seen at Velocity. Here, the number of false components found in the shipments from suppliers has actually fallen. He attributes this to the fact that Velocity has set up a sophisticated system of supplier selection. The criteria for each supplier are strict, and have become even more stringent over the past few years. The thought behind it is clear: the more careful you select your suppliers the fewer counterfeit components you will find in the products being shipped to you. Simple maths and common knowledge throughout the industry, I believe.

Johan Dahl

The key is how to set up the selection process for the suppliers you work with. Johan Dahl, Director EMEA at Velocity, explains: “our selection process as well as testing routine is so well established and known throughout the market that suppliers with dodgy products do not actually attempt to sell us their products.”

“We inspect every single shipment that comes in, regardless of what supplier it is from.”

Before Johan joined Velocity he attended one of the many presentations that Jason holds on the subject and he stumbled over exactly that line. He thought there was no way Velocity would do that / could do that since inspecting every order is such a time and money consuming exercise.

Now he has to admit that it was the truth.

“Why we do it? Simple, our reputation is on the line. We cannot control certain market conditions, true. But reputation – as well as honesty – you do have control over”, Jason explains. “We do not want a single product that could harm a person or another company to leave one of our Inspection and Distribution Centres (IDC). The way we do it is that we select our suppliers very carefully and test every single order very thoroughly.”

The sentiment is not surprising when you remember the kind of customers Velocity serves. All three of its IDCs utilize sophisticated inspection equipment and highly trained and certified Inspectors.

Its IDC in Austin is tailored to the specific needs of high-reliability customers from the US, which require special testing such as Scanning Electron Microscopy, heated solvents testing, and solderability testing. As the customer portfolio in Europe is similar, Velocity is in the process of upgrading its IDC in Amsterdam (which was opened in January 2015) to mirror the capabilities of its IDC in Austin.

The company has been expanding enormously, with the latest addition being an office in Stockholm (Sweden) that will serve the Scandinavian market. It will cooperate closely with the British sales office and the testing hub in Amsterdam. As a hint for future things to come, Johan Dahl also tells me that they are looking to open an office in Germany before the year is out.

Despite all changes, one thing will remain the same. Both men are certain that the stringent supplier selection and the comprehensive testing will never be done away with. Those are here to stay.

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